The rise in credit demand was led by the transport sector, Equifax says. Photo: 123RF
Business credit demand has risen at its fastest level in two years as firms signal a more positive outlook despite higher interest rates.
Data from credit reporting firm Equifax showed business credit applications rose 6.3 percent in the second quarter, the biggest increase since the same period in 2021.
Loan applications rose 7.2 percent, while asset finance applications increased more than 13 percent.
Equifax New Zealand managing director Angus Luffman said the rise in credit demand was seen across the board, and firms saw more demand for their goods and services.
"Generally, applications for business credit are a sign of intentions to spend or invest, and so that would be a generally a positive view in terms of outlook," Luffman said.
Towards the end of the first quarter Equifax observed some recovery in business credit demand, which flowed into the second quarter, he said.
"NZ businesses are getting on with business, with support from lenders. The availability and growth of business credit is a key foundation of economic growth. Business credit demand growth for [the second quarter] was exhibited across the lender landscape, which indicates broad based demand growth."
He said the rise in credit demand was led by the transport sector, followed by accommodation and food services, and manufacturing.
"Activity in both services and asset building segments are an encouraging sign for broader cross sector activity. Businesses investing in productive assets, either as upgrades or new, indicates broader economic activity and productivity," Luffman said.
However, the Equifax report said trade credit applications remained softer, with applications up 1.1 percent from a year ago.
"We expect trade credit to remain subdued as businesses tighten trading terms to cope with the cash flow squeeze as costs continue to rise," Luffman said.